Zuckerberg Outside Olympus of the Scrooges: Facebook’s Collapse Burns His Wealth

From riches to rags. Unlike the investors who bet on the social network, Facebook, its founder, Mark Zuckerberg, can be consoled on his honeymoon through Italy. In 10 days, the stock lost $10 of its initial $38 share price, causing Zuckerberg to slide off the list of the 40 richest men in the world. The descent was even faster than the ascent, which, in less than eight months, brought him from a Harvard dorm room to the Olympus of billionaires. On the day of the listing, he was entered, by law, into the select listing of the 20 Scrooges of the planet; then came the decline.

It has burned Facebook’s market capitalization (the investors have already lost $25 billion) and Zuckerberg’s fortune, who fell below the 40th spot, decreased by $800 million. The creator of the social network will certainly not end in ruin, but the share price is likely to drive him to leave his Roman holiday with his young wife. When he was married, he sat on a pile of about $20 billion; when he left for the Old Continent, the nest egg had shrunk to a bit more than $17 billion; today, Mark, according to the Bloomberg index, is sitting on a mountain of gold worth $14.7 billion. It’s an immense fortune, but one which erodes quickly and certainly, and not because of an Italian shopping spree – the entrepreneur is pretty cheap: he does not drink wine and does not leave a tip, which is customary among Americans.

Burning $5 billion in a few days certainly pleases no one. The idea of possibly losing much more by the end of the year must stir up its own anger. And because both class action lawsuits are being put forth in the United States and Morgan Stanley promised to reimburse those who paid $43, analysts continue to insist that the stock is expensive, too expensive. At $38 a share, it was valued at 83.1 times the company’s earnings, more expensive than 99 percent of the companies listed on the S&P500. Now, under $29, it is still valued at 29.5 times expected profits for 2014, much more than competitors on the Nasdaq – to align [with the market], it must fall to $23. Only Google and Amazon have business models that convince the market, while doubts about Facebook show no tendency to decrease. And so Zuckerberg is likely to slip further away from the magnificent 20. At $23 a share, his worth will be “just” $12 billion, which is two times the market capitalization of Fiat.